Acronym

Associations seem to be more risk-averse than for-profit companies. I wonder if volunteer leaders have as much tolerance for suggesting risk-taking in their associations as they would in their own businesses.

Scott, I think the issue isn't so much needing to jump on bubbles but to be more entrepreneurial in general, regardless of the economy at large.

Organizations that are used to changing themselves frequently will do much better when everything changes around us as it has rather dramatically over the past year or two.

Scott,
I like this post a lot.... The tortoise approach of 'Slow and steady wins the race' can be helpful and fairly stable, but it feels sometimes like it limits the potential and capacity of the group...to me, people show their most beautiful, resourceful, and inspiring traits when things are hard, not easy or stable. And our most fundamental, associations are about people. Riding these bubbles and getting better at understanding where the association is at in any given time could be a great trait to cultivate for an organization, is that what strategic planning is?

And I bet some of the best, most lasting things, can come out of even the worst bubble bursting. maybe its essential, as much of a bubble is represented by sort of a groupthink, where the key players involved agree to a certain set of ideas that are creating some form of success; when conditions change, the bubble bursts, paving the way for a new set of individuals and ideas to rise. Just throwing out ideas, I could just be blowing bubbles filled with hot air here!

Maybe not enough associations are building an appropriate portfolio with their efforts.

Financial planners advise individuals to have a mix of investments based on their goals/timeframe, some steady and sure elements, some long-term growth, some high potential but high risk, etc.

I wonder if assessing association efforts against a similar type of framework would make it easier for people to talk about this. Most are probably using similar language in their investment portfolio.

I think we also have to remember a mindset among many volunteers that evokes conservative thinking: "I don't want to be the one who screwed things up and to be forever remembered for doing so."

Scott, I agree that associations should be more entrepreneurial and take bigger risks. But they also need a better understanding of what "risk" really is.

Many of the associations that are hurting right now are hurting because they bet on what many considered to be the least risky, most conservative business units for associations.

They sold advertising.

It made perfect sense for an association -- which is essentially an audience -- to generate revenue by selling access to that audience. We have eyeballs, let's sell them.

So in an environment that was very conducive to it, associations launched magazines, websites, events, whatever and suddenly found themselves awash in cash. They had the eyeballs, other people wanted those eyeballs, the association cashed in. They built big infrastructures around the revenue that advertising (and similar kinds of programs) generated.

Doing this, which seemed to be the least risky thing an association could do, turned out to be the riskiest thing it could do. Because when the economy turned, suddenly nobody wanted to pay for eyeballs, and all of that money the associations were minting evaporated. Because the associations weren't selling anything real, they weren't selling anything tangible -- they were just selling access to an audience.

When all you have is an audience -- when all you are is a community, when the only thing tangible you have to sell is that a certain group of people get your magazine or receive your emails or visit your website, then what do you do when the people who actually sell real things to your audience no longer want, need, or can afford the access that you're offering?

Well, then you find yourself like many associations today, watching lost advertising, sponsorships etc blowing holes in their budgets and decimating their infrastructure.

So, I agree that associations should take risks and not be afraid to ride a bubble. But the only way an association can truly excel and grow in ANY economy is if they understand and execute the fundamentals of their operation properly. It means not getting carried away by specific revenue streams that happen to be successful right now. It means not being afraid to fail, but also not being afraid to think of successes as things that may eventually fail. It means never believing your own hype.

I would argue that any association that continues to view the business side of their operation as fueled primarily by being a conduit to an audience is building itself on weak, shifting sand, whether they are rising with the overall economy or not.

Democracy is not very nimble by nature. Riding bubbles and risk-taking demand flexibility and responsiveness uncommon in non-profit enterprises. Volunteer leaders are stewards and by definition their role and responsibility is assuring the continuity of the enterprise. Most often, that is done through conservative decision-making, financial management and limited exposure to risks of all sorts at all levels. As Jeff Cufaude so accurately points out they don't want to be "the one who screwed things up."

Which leaves "riding the bubble" up to the chief staff executive and their team. Only here the risk and reward equation is even more difficult. CEO's and staff don't want to be the "ones who got fired for taking a risk" (for example, the American Medical Association and the Sunbeam appliance partnership) so most operate in the shadow of the Board's conservative code and culture. The gradual straight-line gain is seen as the only safe bet. And as others have written that fails to serve the members, the association and ultimately society. We are diminished by striving to be less rather than flourishing while trying to be more.

It's not about being, or not being, risk averse. (Many for-profits that some people insist on comparing themselves to, embraced risk - and we're all paying for their mistakes).

It's not about bubbles or straight lines.

It's all about making smart decisions. Sometimes they may involve risk, sometimes they may not. It doesn't matter.

Always think and act strategically. Just make sound decisions.

By the way, many people who obtained balloon-rate mortgages did not make sound decisions. They had no good reason to expect to have more money five years hence then they had when signing the mortgage. So, in those cases, the "bubble" philosophy was a bad one.